McDonald's Customer Satisfaction Drops

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McDonald's Customer Satisfaction Drops

06/20/2010

NEW YORK -- Despite posting industry-beating same-store sales for years, McDonald's saw a 4.3-percent drop in its customer satisfaction score in 2010, as measured by the American Customer Satisfaction Index, reported Nation's Restaurant News.

According to the latest ACSI, which was founded at the University of Michigan's Ross School of Business and is produced by ACSI LLC, McDonald's satisfaction score fell from 70 out of 100 in 2009, to 67 this year.

"This may seem somewhat paradoxical in view of McDonald's sales growth over the past year, particularly compared to the competition," Claes Fornell, founder of the ACSI, said in a statement last week. "But as increasingly frugal consumers have made price more salient, McDonald's acquired more customers. These newcomers seem less satisfied, and were it not for the economy some of them would probably rather eat somewhere else."

McDonald's satisfaction score had increased every year from 2005 until this year, and chain executives had credited a commitment to value and a diverse menu for helping drive recent market share gains and a string of positive same-store sales results.

NRN reported that Jeffrey Bernstein, a restaurant analyst with Barclays Capital in New York, said in a research note that a "disconnect ... remains," as the chain's score of 67 is the lowest in the quick-service segment, which averaged a score of 75, even though McDonald's averaged about 5-percent growth in same-store sales since 2005.

McDonald's lower score, and lower scores for many smaller chains, contributed to an overall drop in the satisfaction score for the quick-service segment, which fell from 78 to 75. However, most of the nation's larger quick-service chains, especially the four big pizza brands, improved their individual scores in 2010, compared with 2009.

As a segment, full-service restaurants also posted a decrease in customer satisfaction, falling from 84 in 2009 to 81 this year. Top-scoring Olive Garden, Red Lobster, Outback Steakhouse and Chili's all improved their individual scores, but satisfaction declines for several other chains led to the overall slip.

The pizza segment's four largest brands placed in the top six scores among quick-service brands in the ACSI, with Papa John's leading the way at 80, up from 75 in 2009. Little Caesars and Pizza Hut tied with Starbucks for the next-highest score of 78, while Domino's Pizza tied with Wendy's with a score of 77.

"The pizza category continues to lead the QSR industry , likely due to relative ease of operations and a simplified menu, supporting their most recent sales revival," analyst Bernstein noted.

Those four brands also are all competing on price. Pizza Hut and Papa John's both are promoting large pizzas for $10, while Little Caesars has had a $5 deal for its large Hot-N-Ready pizza for quite some time. Domino's, which scored a major sales and public-relations coup this year with the launch of an entirely reformulated pizza, has offered two medium, two-topping pizzas for $5.99 each since the introduction of the new pizza.

Papa John's has kept pace with its competitors in terms of value promotions, but a spokesman contended that the brand's "Better Ingredients, Better Pizza" positioning remains a greater driver of guest satisfaction.

"The focus on quality and service is what got us to the top," said Chris Sternberg, senior vice president of corporate communications and general counsel for Papa John's. "You have to have value to be in the ballgame, but it's what your brand stands for outside of value that matters, and for us, it's quality."

KFC and Burger King also made large gains in customer satisfaction, raising their ASCI scores year-over-year from 69 to 75 and from 69 to 74, respectively. Taco Bell's score also rose to 74, from 73 in 2009.

The largest chains in the full-service restaurant segment also made gains in customer satisfaction. For the fourth year in a row, Olive Garden led that segment, this year with a score of 84, up from 81 last year. Darden Restaurants' sister chain Red Lobster saw its score increase from 80 in 2009 to 83 in 2010 to grab the second spot. Following in third and fourth places were Outback Steakhouse with a score of 80, and Chili's with a score of 78.